ST. LOUIS — A proposed rate increase from the Missouri American Water Company would be “disproportionately bad” for customers in the St. Louis area, consumer watchdogs say.
The St. Louis region’s largest water utility is seeking to raise rates and grow its revenue by as much as $102 million compared to its currently authorized earnings — an increase that could reach 32% overall, according to some consumer advocates.
The company is also renewing a longtime push to have its 470,000 water customers across the state pay a single rate, a move that watchdogs say would force the St. Louis region to shoulder an undue share of the utility’s costs and effectively subsidize water systems in other parts of the state.
“It’s a lot of things to worry about,” said John Coffman, an attorney with the Consumers Council of Missouri. “If they got everything they wanted, it would actually be disproportionately bad for St. Louis County and St. Charles County.”
But Missouri American Water says it has $950 million in necessary investments, including 275 miles of pipe replacements plus upgrades to treatment plants, pumping stations and other infrastructure. It has started some of the work and expects to finish next year.
The utility’s three increases requested since 2015 have each become progressively larger, by percentage.
“We are seeing a pattern of Missouri American asking for more and more in each rate case,” said Caleb Hall, an attorney for the Missouri Office of Public Counsel, which advocates for consumers of monopolized utilities on matters before state regulators.
Multiple aspects of the proposal have attracted scrutiny and criticism.
The size of the request is one of them. Regulated utilities are authorized by the state to charge a given amount so they make a certain profit. Missouri American Water asserts that its current earnings do not surpass the profit it is authorized to make. But staff for the utility regulators at the Missouri Public Service Commission say the company’s water business is actually over-earning, by $1.3 million. (The same analysis, however, says the company’s sewer operations — a smaller part of its business, which serves about 15,000 customers — are under-earning by $6.5 million, resulting in a recommended net revenue increase of $5.2 million.)
Some say the main issue, though, is the company’s resurrected aim to consolidate charges in water districts across the state.
Right now, Missouri American Water services systems big and small from St. Louis County to rural Missouri.
Customers are charged one of two different rates: one set for those in St. Louis County and another for everyone else. The separation helps ensure that expenses tied to the maintenance of the distinct water systems are borne by the customers in each region.
But the company wants to consolidate further, by having customers everywhere in the state pay the same rates. Opponents argue that having so many separate systems combined into one pool makes it easy for costs tied to specific projects to get spread out and scrutinized less closely, while causing customers across the entire map to pay more.
“There is this continued push to have our region subsidize the rest of the state and several other cities,” said Coffman. “They’ve been trying for at least 20 years to make their rates the same rate throughout the state, even though they’re different-sized systems across the state. ... They have been pushed back again and again, but they come right back and ask for it.”
Such a proposal has previously been rejected, as recently as 2018 when the company’s last rate changes were finalized with the PSC.
Now, if the company’s request were granted in full, residential customers in St. Louis County who use 3,000 gallons of water monthly would expect their bills to increase by $9 per month, according to estimates from the Office of Public Counsel. In comparison, bills for the same level of residential water use would rise between $3 and $6 per month in most other parts of the state served by the company.
The utility’s 340,000 St. Louis County customers would also continue to pay a region-specific surcharge tied to infrastructure replacement.
The prospect of raising rates in a pandemic that has wrought widespread economic hardship also has raised eyebrows. Although delinquent utility payments and resulting disconnections have surged over the past year, state experts were not aware of analyses on the potential impacts of higher water rates — and whether they could trigger further payment problems for vulnerable customers.
“We hope they can keep any change to a minimum,” Coffman said. “There are a lot of people hurting economically that have not ever hurt economically before.”
Missouri American Water said financial assistance is available to customers. Shutoffs have decreased 12% from pre-pandemic levels, it said.
The proposed rate increase was filed with state utility regulators in June. Public hearings, held virtually, started Wednesday in the Kansas City region and continued in the St. Louis area Thursday, Friday, and into next week.
The PSC is also taking written comment. Testifying at the hearings, though, ensures that comments will be heard and reviewed by the commission. More information is available online at psc.mo.gov.
Bryce Gray's most memorable stories of 2020: Bat poop, 'orphaned' plants and animals, buses
Like reporters of seemingly all stripes and beats, much of my year was spent reporting on the coronavirus. While lots of my energy went toward tracking the alarming trajectory of the outbreak, some of the stories I remember most showed the personal tolls of the pandemic — like how its financial fallout jeopardized basic human necessities through a “tidal wave” of utility disconnections, and how the risks from the virus were disproportionately felt by certain minority groups and economic classes of workers, such as those who rely on St. Louis’ busiest bus route.
Despite the severe and urgent challenges posed by the pandemic, I aimed for my coverage not to lose sight of an even larger crisis facing society: climate change. One story at the intersection of both crises examined how fiscal strain from the pandemic threatens to “orphan” collections of plants, animals, and other natural specimens at museums, universities, and other institutions — vital tools for wide-ranging research, and catalogs that are often irreplaceable as mass extinction accelerates. Another memorable climate-related story focused on bat poop piled several feet deep in Missouri caves and accumulated over thousands of years, which researchers are digging into for clues about how surrounding land and vegetation has changed over time, as reflected by bat diets.
Looking back on it, my first story published in 2020 ended up being one of my favorites to revisit — largely for reasons I couldn’t have predicted at the time. Last New Year’s Eve, I spoke with St. Louis resident Andy Magee at the Gateway Arch, as he completed a yearlong push to visit all 419 units of the National Park system in 2019 — a 50-state and several-territory odyssey that took him from north of the Arctic Circle to south of the Equator, and from the Caribbean to the other side of the international date line.
After nearly a year of quarantine, his feat stokes a welcome dose of wanderlust and hope for better, more adventurous — and safer — days ahead.